Journalism from London.

The people who could expose the City’s folly are reluctant to speak out because of a hostile judiciary

The Observer
Somewhere in China, David Li is keeping his head down. Before the crash, his grateful admirers in Wall Street and the City declared that he deserved the Nobel Prize for Economics for discovering the wondrously enriching theory of “Gaussian copula functions”, which turned base assets into gold. While the market for credit default swaps went from $920bn in 2001 to $62 trillion in 2007, he was a genius. Now that his name appears in headlines such as: “Was David Li the guy who ‘blew up Wall Street’?” acclaim from the Swedes seems unlikely.

Mathematicians are trashing his reputation and the reputation of the banks’ other quantitative analysts. Their critiques are, inevitably, complicated, but the quants’ basic fault is easy enough to grasp. They assumed they could place reassuringly neat numbers on the risks of default in bundles of mortgages or bonds. Their figures were fantasies that bore no relation to the real economy in which homeowners and companies had to fund their debts because the quants never understood that the uncertainties in calculating risk were so great, all attempts to measure them were dangerously misleading.

“They were pretending mathematics was magic,” explained Tim Johnson at Heriot-Watt University, one of a group of financial mathematicians in British universities who specialise in taking apart the models of bankers and dealers.

Ministers, led by Lord Drayson, have been wooing Johnson and his colleagues of late and I can’t say I am surprised. Tens of millions of people in the rich world and hundreds of millions in the poor are losing their livelihoods because bad maths allowed bankers to pretend to themselves that they were not being insanely reckless. The government thinks it knows how to stop a recurrence of the folly. It reasons that Britain is lucky enough to have a band of independent experts who can save jobs and stop the taxpayer being fleeced by pointing out the errors of the City’s calculations. The public pays the academics’ salaries and academics can return the compliment by protecting the public.

“You have a fucking duty to speak out,” as one blunt politician explained the deal to them.

Nick Cohen’s books are like the best Smiths songs; however depressing the content, the execution is so shimmering, so incandescent with indignation that the overall effect is transcendently uplifting
Julie Burchill, Prospect
Cohen is perhaps the most insightful, thought-provoking and entertaining political writer in Britain today, and comes from the honest tradition of English liberal thought that threads from John Milton to John Stuart Mill and George Orwell
Telegraph
‘Into the space vacated by the controversialist Christopher Hitchens we might recruit the sardonic, sceptical columnist Nick Cohen The Times
‘Writing with passion, wit and erudition, Cohen draws upon the spirit of Orwell and Milton in his call for a fightback against the onslaught on free speech’ Metro
‘You Can’t Read This Book. You can, OF COURSE. And you should. Cohen is right about everything that matters.’ Standpoint

'A roaring polemic of outrage against the moral and political crisis of the liberal tradition. It is already one of the most discussed current affairs books of the new year…At the very least it forces anyone on the left to think carefully about where their movement has ended up in the modern world.' The Guardian

‘Exceptional and necessary…Do not feel you have to be a leftist or liberal to read it, because it engages with an argument that it crucial for all of us, and for our time.’ Christopher Hitchens, Sunday Times

‘This is a brave, honest and brilliant book. Every page has a provocative insight that makes you want to shake the author's hand or collar him for an argument. Who could ask for more?’ The Observer